James Hardie: penalties for Morley and Shafron reduced

In Morley & Ors v Australian Securities and Investments Commission [2010] NSWCA 331 (discussed here) a full bench of the NSW Court of Appeal dismissed the appeal by the former CFO Phillip Morley and partly accepted the appeal by the former Secretary and General Counsel Peter Shafron. In Morley v Australian Securities and Investments Commission (No 2) and Shafron v Australian Securities and Investments Commission (No 2) [2011] NSWCA 110 the NSW Court of Appeal considered appeals by them against decisions by the trial judge in respect of relief from liability, disqualification and pecuniary penalty pending the hearing by the High Court for special leave to appeal by both. In considering Morley's application for relief the Court stated: Although we have found that he acted honestly, it does not appear to us that he ought fairly to be excused, or that he should be relieved from liability for the contravention. Proper corporate governance and business activity depend on business leaders adhering to standards not only of honesty but also of care and diligence. The Court of Appeal decided that: (a) neither Mr Shafron nor Mr Morley should be relieved from liability for their contraventions; (b) Mr Shafron should remain disqualified from managing corporations for 7 years, and in place of the judge's order Mr Morley should be disqualified from managing corporations for 2 years from 27 August 2009; (c) in place of the judge's orders, Mr Shafron should be ordered to pay a pecuniary penalty of $50,000 and Mr Morley should be ordered to pay a pecuniary penalty of $20,000. ASIC's application to the High Court to appeal the Court of Appeal's to allow the appeals by the non-executive directors is still pending.

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